Fortescue Shares Climb on A$2.2 Billion Sinosteel Stake Report

May 26, 2008

May 26 (Bloomberg) – Fortescue Metals Group Ltd., seeking to become Australia’s third-largest iron ore exporter, rose to near a record in Sydney after the Australian Financial Review reported Sinosteel Corp. wants to buy a A$2.2 billion ($2.1 billion) stake.

Sinosteel, China’s second-largest iron ore trader, is in talks with Fortescue shareholder Harbinger Capital Partners to buy an 8 percent stake, the newspaper reported, citing Sinosteel’s Australia deputy general manager William Ren. He declined to comment today when contacted by phone in Perth by Bloomberg News.

Sinosteel, bidding to buy another Australian iron ore producer, Midwest Corp., said last week it couldn’t rule out taking a stake in Fortescue. Chinese companies are snapping up mining assets in Australia to ensure supplies for the world’s fastest-growing major economy.

Fortescue, controlled by Australia’s richest man Andrew Forrest, climbed as much as 37 cents, or 3.9 percent, to A$9.93 and traded at A$9.90 at 11:32 a.m. Sydney time on the Australian stock exchange, 8 cents short of its A$9.98 intraday record on May 23. The stock has risen 32 percent this year and almost tripled in the past 12 months.

Baosteel Group Corp. and Aluminum Corp of China, or Chinalco, have both been linked to talks with Harbinger, the Financial Review reported. Beijing-based Sinosteel wants to buy Harbinger’s entire 16 percent stake, though the fund was only prepared to sell half, the newspaper said, citing Ren.

Harbinger hasn’t indicated to Fortescue that it was seeking to sell its stake, Cameron Morse, a spokesman for Perth-based Fortescue, said today by phone.